Unsurprisingly given the tight timelines set and the involvement of politicians, the plans for setting up central clearing for OTC credit derivatives in Europe have hit a problem. Originally it was planned to have this up and running by mid 2009, however both sides are already starting to blame each other for the delay. "A firm engagement was expected from the involved industry and regulators. This engagement has not been given," a spokesman for EU Internal Market Commissioner Charlie McCreevy said. The original agreement was made on December 10th last year but the deal has collapsed, according to some of the dealer banks, because McCreevey and the EU are insisting that any European-based contracts must be cleared within Europe and not therefore in the US at ICE or the Clearing Corporation - thus restricting the options for global dealers. "There are a variety of solutions for clearing. The EU is really overstepping its boundaries, pushing for an EU-based clearing house for European trading," as one derivatives industry source is quoted as saying.

So the saga of who will win the clearing war seems lke it will run for a little time yet as participants, politicians and service providers jostle for supremacy. Expect therefore more of the same and multiple press releases extolling the virtues of the various players (cf NASDAQ today announcing that they see "major returns from derivatives clearing..."